Fla. sues online travel companies over hotel taxes

TALLAHASSEE, Fla. 
The state of Florida is suing online travel reservation companies over hotel taxes, the latest in a string of lawsuits nationwide claiming the sites owe local authorities millions of dollars.

Attorney General Bill McCollum sued Expedia and Orbitz on Tuesday, claiming they failed to pay Florida the full amount of taxes collected on hotel room rentals through their sites.

"The customer is paying the tax already," said McCollum, who is running for governor in 2010. "Orbitz and Expedia are not remitting to the state all the taxes they have collected."

Consumers are charged a rate when they book a room online, and the company later reimburses the hotels a lesser amount, allowing them to pocket service fees. The taxes are paid on that less expensive rate, prompting legal action by cities and states that claim they're being cheated out of millions of dollars in tax dollars.

"The decision to file a lawsuit will hurt the interest of millions of travelers and tourism workers in Florida," said Andrew Weinstein, spokesman for the Washington-based Industry Travel Services Association. "It will make it more expensive for visitors to come to the state."

Weinstein said the lawsuits amount to little more than attempts by trial attorneys to make some money.

"The fees from traditional travel agents, tour operators and other middlemen have never been taxed," he said, adding that online travel companies "only connect consumers with good deals on rooms in the same way that offline travel agents or tour operators do."

Expedia issued a statement Tuesday denying the allegations and saying the lawsuit is "meritless and does nothing but detract from our efforts to bring visitors to Florida."

The Florida lawsuit – filed in a state Circuit Court in Tallahassee – claims the companies have been keeping some of the tax as profit.

Similar complaints against online travel companies have been filed by cities including New York, Chicago, Philadelphia, San Francisco and Atlanta and the tourist town of Branson, Mo. Officials have alleged that online travel services charged customers for local tourism taxes but never remitted those funds.

"In these tough budget times, I hope we can ensure that these companies pay what may be owed to Florida, instead of pocketing the tax our citizens have already shelled out," Florida Chief Financial Officer Alex Sink said Tuesday.

Sink, the lone Democrat on the Florida Cabinet, had pushed for action on the issue at last week's Cabinet meeting. She and McCollum, a Republican, are seeking their respective party nominations for governor and could end up facing each other in Florida's 2010 race.